The focus of this blog is on the wonders of government-run health-care everywhere but I also note the damage done to private medicine by a legal system that supports predatory litigation.

The long-established socialized medicine systems in Britain and Australia are a particularly relevant warning about where such systems end up.

Posts by John J. Ray (M.A.; Ph.D.)

Wednesday, March 24, 2010

Barack Obama signs health care bill amid warnings of Pyrrhic victory

President Barack Obama will sign into law the historic reform of the American health care system that has eluded his predecessors for a century on Tuesday. The 219 to 212 vote in the House of Representatives, in which 34 Democrats sided with a united Republican opposition, was a significant victory for Mr Obama. But critics warned it would be a Pyrrhic one that could lead to electoral disaster for his party in November's midterm elections. Mr Obama's poll ratings have fallen steadily to just under 50 per cent over the 14 months in which he has pushed relentlessly for health care reform.

The legislation, due to be signed by Mr Obama in a South Lawn ceremony, will expand health insurance coverage to 32 million currently uninsured Americans at a cost of $938 billion (£622 billion) over 10 years.

It will mandate that almost every American carry health insurance-a provision that opponents are set to challenge in the courts. The legislation expands Medicaid, the state health programme for the poor, while those earning more than $200,000 (£133,000) will face higher taxes.

A package of changes to an earlier bill passed by the Senate was still to be considered by the body but Democrats were confident that they had the votes to secure easy passage and Republicans conceded that their only options were future repeal and fighting provisions in the courts.

Robert Gibbs, the White House press secretary, responded jubilantly to the Capitol Hill vote late on Sunday with an email that played on Mr Obama's hope-laden campaign slogan: "Yes we can became yes we did."

Mr Obama himself proclaimed: "We pushed back on the undue influence of special interests. We didn't give in to mistrust or to cynicism or to fear. Instead, we proved that we are still a people capable of doing big things. This isn't radical reform but it is major reform.

Nancy Pelosi, Speaker of the House and the architect of the successful plan to pass the bill, described it as a "great act of patriotism" that honoured the vows of our Founders for us to be a land of opportunity, all the way back to before we were a country, in the Declaration of Independence talking about life, liberty and the pursuit of happiness".

However, critics warned that voters would have their revenge. Senator John McCain denounced the “euphoria” and “inside-the-Beltway champagne toasting” and predicted that Democrats would be punished by voters in the mid-term congressional elections. “We are going to have a very spirited campaign coming up between now and November. And there will be a very heavy price to pay for it,” he said.

Republicans said the bill would burden the nation with unaffordable levels of debt at a time of economic crisis, leave individual states with expensive new obligations and give an inefficient and overweening government an unacceptably enlarged role in the health care system.

The deal in the House of Representatives was sealed on Sunday afternoon when a handful of anti-abortion Democrats led by Representative Bart Stupak of Michigan agreed to vote yes in return for a White House executive order stating that federal funds would not be used to pay for abortions.

There was a feverish atmosphere on Capitol Hill, where large numbers of conservative protesters gathered to chant "Kill the bill" and wave signs that said "Don't Tread on Me" and "Doctors Not Dictators". John Boehner, Republican leader in the House of Representatives, said: "The American people are angry. This body moves forward against their will. Shame on us."

Representative Paul Ryan of Wisconsin, a rising star in the Republican party, denounced the bill as "a fiscal Frankenstein" while his colleague Virginia Foxx described it as "one of the most offensive pieces of social engineering legislation in the history of the United States".

Rush Limbaugh, the Right-wing radio host, spoke for many American conservatives when he railed: "We're not a representative republic. The will of the people was spat upon."

The legislation will still leave 23 million uninsured in 2019, a third of those illegal immigrants. According to the non-partisan Congressional Budget Office, the cost of the bill will be offset by savings in Medicare, the state health system for the elderly, and by new taxes and fees, including a tax on some employer schemes and on wealthy Americans.

With the passage of the legislation allowing the federal government to take control of the medical care system of the United States, a major turning point has been reached in the dismantling of the values and institutions of America. Even the massive transfer of crucial decisions from millions of doctors and patients to Washington bureaucrats and advisory panels-- as momentous as that is-- does not measure the full impact of this largely unread and certainly unscrutinized legislation.

If the current legislation does not entail the transmission of all our individual medical records to Washington, it will take only an administrative regulation or, at most, an Executive Order of the President, to do that. With politicians now having not only access to our most confidential records, and having the power of granting or withholding medical care needed to sustain ourselves or our loved ones, how many people will be bold enough to criticize our public servants, who will in fact have become our public masters?

Despite whatever "firewalls" or "lockboxes" there may be to shield our medical records from prying political eyes, nothing is as inevitable as leaks in Washington. Does anyone still remember the hundreds of confidential FBI files that were "accidentally" delivered to the White House during Bill Clinton's administration? Even before that, J. Edgar Hoover's extensive confidential FBI files on numerous Washington power holders made him someone who could not be fired by any President of the United States, much less by any Attorney General, who was nominally his boss.

The corrupt manner in which this massive legislation was rammed through Congress, without any of the committee hearings or extended debates that most landmark legislation has had, has provided a roadmap for pushing through more such sweeping legislation in utter defiance of what the public wants.

Too many critics of the Obama administration have assumed that its arrogant disregard of the voting public will spell political suicide for Congressional Democrats and for the President himself. But that is far from certain. True, President Obama's approval numbers in the polls have fallen below 50 percent, and that of Congress is down around 10 percent. But nobody votes for Congress as a whole, and the President will not be on the ballot until 2012.

They say that, in politics, overnight is a lifetime. Just last month, it was said that the election of Scott Brown to the Senate from Massachusetts doomed the health care bill. Now some of the same people are saying that passing the health care bill will doom the administration and the Democrats' control of Congress. As an old song said, "It ain't necessarily so."

The voters will have had no experience with the actual, concrete effect of the government takeover of medical care at the time of either the 2010 Congressional elections or the 2012 Presidential elections. All they will have will be conflicting rhetoric-- and you can depend on the mainstream media to go along with the rhetoric of those who passed this medical care bill.

The ruthless and corrupt way this bill was forced through Congress on a party-line vote, and in defiance of public opinion, provides a road map for how other "historic" changes can be imposed by Obama, Pelosi and Reid.

What will it matter if Obama's current approval rating is below 50 percent among the current voting public, if he can ram through new legislation to create millions of new voters by granting citizenship to illegal immigrants? That can be enough to make him a two-term President, who can appoint enough Supreme Court justices to rubber-stamp further extensions of his power.

When all these newly minted citizens are rounded up on election night by ethnic organization activists and labor union supporters of the administration, that may be enough to salvage the Democrats' control of Congress as well.

The last opportunity that current American citizens may have to determine who will control Congress may well be the election in November of this year. Off-year elections don't usually bring out as many voters as Presidential election years. But the 2010 election may be the last chance to halt the dismantling of America. It can be the point of no return.

House Democrats last night passed President Obama's federal takeover of the U.S. health-care system, and the ticker tape media parade is already underway. So this hour of liberal political victory is a good time to adapt the "Pottery Barn" rule that Colin Powell once invoked on Iraq: You break it, you own it.

This week's votes don't end our health-care debates. By making medical care a subsidiary of Washington, they guarantee such debates will never end. And by ramming the vote through Congress on a narrow partisan majority, and against so much popular opposition, Democrats have taken responsibility for what comes next—to insurance premiums, government spending, doctor shortages and the quality of care. They are now the rulers of American medicine.

Mr. Obama and the Democrats have sold this takeover by promising that multiple benefits will follow: huge new subsidies for the middle class; lower insurance premiums for consumers, especially those in the individual market; vast reductions in the federal budget deficit and in overall health-care spending; a more competitive U.S. economy as business health-care costs decline; no reductions in Medicare benefits; and above all, in Mr. Obama's words, that "if you like your health-care plan, you keep your health-care plan."

We think all of this except the subsidies will turn out to be illusory, as most of the American public seems intuitively to understand. As recently as Friday, Caterpillar Inc. announced that ObamaCare will increase its health-care costs by $100 million in the first year alone, due to a stray provision about the tax treatment of retiree benefits. This will not be the only such unhappy surprise.

While the subsidies don't start until 2014, many of the new taxes and insurance mandates will take effect within six months. The first result will be turmoil in the insurance industry, as small insurers in particular find it impossible to make money under the new rules. A wave of consolidation is likely, and so are higher premiums as insurers absorb the cost of new benefits and the mandate to take all comers.

Liberals will try to blame insurers once again, but the public shouldn't be fooled. WellPoint, Aetna and the rest are from now on going to be public utilities, essentially creatures of Congress and the Health and Human Services Department. When prices rise and quality and choice suffer, the fault will lie with ObamaCare.

While liberal Democrats are fulfilling their dream of a cradle-to-grave entitlement, their swing-district colleagues will pay the electoral price. Those on the fence fell in line out of party loyalty or in response to some bribe, and to show the party could govern. But even then Speaker Nancy Pelosi could only get 85% of her caucus and had to make promises that are sure to prove ephemeral.

Most prominently, she won over Michigan's Bart Stupak and other anti-abortion Democrats with an executive order from Mr. Obama that will supposedly prevent public funds from subsidizing abortions. The wording of the order seems to do nothing more than the language of the Senate bill that Mr. Stupak had previously said he couldn't support, and of course such an order can be revoked whenever it is politically convenient to do so.

We have never understood why pro-lifers consider abortion funding more morally significant than the rationing of care for cancer patients or at the end of life that will inevitably result from this bill. But in any case Democratic pro-lifers sold themselves for a song, as they usually do.

Then there are the self-styled "deficit hawks" like Jim Cooper of Tennessee. These alleged scourges of government debt faced the most important fiscal vote of their careers and chose to endorse a new multitrillion-dollar entitlement. They did so knowing that the White House has already promised to restore some $250 billion in reimbursement cuts for doctors that were included in yesterday's bill to make the deficit numbers look good. Watch for these Democrats to pivot immediately and again demand "tough choices" on spending—and especially tax increases—but this vote has squandered whatever credibility they had left.

Mrs. Pelosi did at least abandon, albeit under pressure, the "deem and pass" strategy that would have passed the legislation without a vote on the actual Senate language. We and many others criticized that ruse early last week, and the House decision to drop it exposes the likes of Norman Ornstein of the American Enterprise Institute and other analysts who are always willing to defend the indefensible when Democrats are doing it.

All of this means the Senate's Christmas Eve bill is ready for Mr. Obama's signature, though only because rank-and-file House Members also passed a bill of amendments that will now go back to the Senate under "reconciliation" rules that require only 50 votes. Those amendments almost certainly contravene the plain rules of reconciliation, and the goal for Senate Republicans should be to defeat this second "fix-it" bill. It's notable that Democrats didn't show yesterday for a meeting with the Senate parliamentarian to consider GOP challenges, no doubt because they fear some of them might be upheld.

Though it's hard to believe, the original Senate bill is marginally less harmful than the "fixed" version, not least because the middle-class insurance subsidies are less costly and it would avert the giant new payroll tax. That's the White House increase in the Medicare portion of the payroll tax to 3.8% that Democrats cooked up at the last minute and would apply to the investment income of taxpayers making more than $200,000.

If the reconciliation bill goes down, Big Labor and its Democratic clients would be forced to swallow a larger excise tax on high-cost insurance plans, and it would also forestall the private student-loan takeover that Democrats included as a sweetener. In other words, they'd be forced to eat the sausage they themselves made as they have abused Congressional procedure to push ObamaCare into law.

We also can't mark this day without noting that it couldn't have happened without the complicity of America's biggest health-care lobbies, including Big Pharma, the American Medical Association, the American Hospital Association, the Federation of American Hospitals, the Business Roundtable and such individual companies as Wal-Mart. They hope to get more customers, or to reduce their own costs, but in the end they have merely made themselves more vulnerable to the gilded clutches of the political class.

While the passage of ObamaCare marks a liberal triumph, its impact will play out over many years. We fought this bill so vigorously because we have studied government health care in other countries, and the results include much higher taxes, slower economic growth and worse medical care. As for the politics, the first verdict arrives in November

The medical system does need reforming — radical reforming. It’s more expensive than it ought to be, and powerful interests prosper at the expense of the rest of us. The status quo has little about it to be admired, and we shouldn’t tolerate it.

Thus, the American people should be fed up with Barack Obama, Nancy Pelosi, and Harry Reid for insulting our intelligence with their so-called heath-care reform. It is nothing of the sort. What they call progressive reform is little more than reinforcement of the exploitative system we suffer today.

Whether intentionally or not, Obama & Co. have misdiagnosed the problem with the current system and therefore have issued a toxic prescription as an alleged cure. They essentially say that the problem is too free a market in medical care and insurance; thus for them the solution is a less-free market, that is, more government direction of our health-care-related activities.

Yet if the diagnosis is wrong — which it is — the prescription will also be wrong.

Note that the attention of nearly all the “reformers” is on the insurance industry. What ostensibly started out as “health-care reform” quickly became health-insurance regulation. A common theme of all of the leading proposals is that insurance companies have too few restrictions on them. So under Obamacare, government will issue more commands: preexisting conditions must be covered; policy renewal must be guaranteed; premiums may not reflect the health status or sex of policyholders; the difference between premiums charged young and old must be within government specs; lifetime caps on benefits are prohibited, et cetera.

In return for these new federal rules, insurance companies are to have a guaranteed market through a mandate that will require every person to have insurance. So what looks like onerous new regulations on the insurance companies turns out to be a bargain they are happy to accept. Instead of having to innovatively and competitively attract young healthy people to buy their products, the companies will count on the government to compel them to do so. Playing the populist role, Obama & Co. bash the insurance companies, but in fact the “reform” compels everyone to do business with them.

What about this would the insurance companies dislike? Health insurance is not the most profitable business you can be in; the profit margin is 3-4 cents on the dollar. So a guaranteed clientele is an attractive prospect. The people who will be forced to buy policies are the healthy, who will pay premiums and make few claims. The only thing the companies don’t like is that that penalty for not complying with the mandate is too small. Many young people may choose to pay the penalty rather than buy the insurance because it will be cheaper. But that presents a problem: when the uninsured get sick and apply for coverage, they won’t be turned down because that would be against the law. So look for harsher penalties in the future to prevent this gaming of the system. The insurance companies win again.

What’s missed is that the “reformers” leave untouched every aspect of the uncompetitive medical and insurance cartels that exists entirely by virtue of government privilege. Most of this privilege is extended by state governments through monopolistic licensing, but Congress could repeal the prohibition on interstate insurance sales and the tax favoritism for employer-provided medical coverage. The ruling party has refused to consider those sensible moves.

The upshot is that this reform is a fraud. It leaves in place the government-created cartels and throws a few crumbs to people who are struggling — but mostly by bolstering the insurance monopoly.

Two myths must be shattered. First, the choice is not between this phony reform and the status quo. The “reform” merely puts makeup on the status quo. The free market is the real alternative.

Second, the free market couldn’t have created the medical mess because there has been no free market in medicine. For generations government has colluded with the medical profession and the insurance industry to force-feed us the system we have today.

The bill will cost more than advertised. It won't be long before Congress is shocked — shocked! — to discover that health-care reform is going to cost a lot more than expected. It's not just the budgetary gimmicks that Democrats have been employing to hide the bill's true cost. It's also that government programs — and government health-care programs in particular — almost always end up exceeding their cost estimates.

For example, when Medicare was instituted in 1965, it was estimated that the cost of Medicare Part A would be $9 billion by 1990. In actuality, it was seven times higher — $67 billion. Similarly, in 1987, Medicaid's special hospitals subsidy was projected to cost $100 million annually by 1992, just five years later; it actually cost $11 billion, more than 100 times as much. And in 1988, when Medicare's home-care benefit was established, the projected cost for 1993 was $4 billion, but the actual cost in 1993 was $10 billion.

Insurance premiums will keep rising. The president has tried to convince people that health-care reform will cut their insurance costs. They are in for a surprise. According to the Congressional Budget Office, insurance premiums will double in the next few years. The bill will do nothing to diminish that increase. In fact, for the millions of Americans who get their insurance through the individual market, rather than from an employer, this bill will raise premiums by 10–13 percent more than if we do nothing. Young and healthy people can expect their premiums to go up even more.

The quality of care will be worse. Doctors' reimbursements for providing care will be squeezed, making it harder to find a doctor. A new survey in the New England Journal of Medicine reports that 46 percent of doctors may give up their practice in the wake of this bill. While that is probably exaggerated, many doctors will likely decide to reduce their patient loads or retire. At the same time, increased demand will create additional problems.

In Massachusetts, after the passage of Romneycare, the wait to see a primary-care physician increased from 33 to 52 days. Research and development will also be cut back, meaning there will be fewer new drugs and other medical breakthroughs. And the government will increasingly intervene in medical decision making, micromanaging medical decisions and deciding what treatments are most effective or, frighteningly, most cost-effective.

The Left will keep pushing for more. Speaker Nancy Pelosi's inner censor was clearly on the fritz this week when she said, "Once we kick through this door, there'll be more legislation to follow." Faced with rising costs and higher premiums, not to mention millions still uninsured, Democrats will blame the "evil" insurance companies and demand further reform. They will argue that we tried "moderate" reform and failed. Pelosi could no longer keep a lid on what the hard Left has been restraining itself from saying all along: It sees this legislation as the perfect first step in the long march to universal single-payer health care.

Republicans won't really try to repeal it. Republicans will run this fall on a promise to repeal this deeply unpopular bill, and will likely reap the political advantages of that promise. But in reality there is little chance of their following through. Even if Republicans were to take both houses of Congress, they would still face a presidential veto and a Democratic filibuster.

But more important, once an entitlement is in place, it becomes virtually impossible to take away. The fact that Republicans have been criticizing Obamacare for cutting Medicare shows that they are not really willing to take the heat for cutting people's benefits once they have them — no matter how unaffordable those benefits are. Paul Ryan put forth a serious plan for entitlement reform — and attracted just six co-sponsors at last count. Enough said.

As Scrooge asked in A Christmas Carol, "Are these the shadows of the things that will be, or are they shadows of things that may be?

A British friend who has been following the health-care debate writes in:

In Britain the introduction of the NHS was passionately supported by both parties. Tory opposition to the legislation accepted the principle of medical care free at the point of consumption and concentrated instead on secondary questions. It could hardly have done otherwise since Churchill's wartime coalition government had developed its own plans for a single-payer system of universal health insurance—along with other statist social welfare measures.

At the time of its passage the cost-benefit structure of the new British system was radically opposite to that of Obamacare. Its benefits—mainly the extension of free medical care from the poor to the middle class—came at once; its costs were delayed for a decade and a half as almost all budgetary health allocations went to current spending and almost none to capital investment. Not until 1962 did a British government embark on a hospital building program; until then—and for many years afterwards—the national health service lived off the fixed capital invested by private Victorian philanthropy. (Even a few years ago you could tell this from the appearance of the buildings.) The advance of medical science today makes a repeat of this performance quite impossible. So the money to meet the increasing demand for medical services will have to come from somewhere other than the capital budget. Where?

Rationing is implicit in both Obamacare and the NHS. But the customers of both systems are very different. Most modern Americans get good health care. They have learned to expect it. They will complain if they don't get it. And they have their present care as a method of comparison to any new system. Brits in 1948 had just survived a terrible war. Rationing was part of their everyday lives. They were a deferential people to begin with in a much more hierarchical society. Brits of today would be much much harder to convince—if they had not got used to getting free but inadequate health care.

And the ratio of winners to losers in both cases is very different. As the previous paragraph suggests, there were no real losers in the Britain of 1948. Only a tiny handful of very rich people had any experience of great medical care—and they were rich enough to pay higher taxes AND private insurance premiums. Everyone else got roughly the same medical care; but now the middle class got it for nothing as most of the poor had done before. Nobody lost—not for another fifteen years when the quality of medical care began to decline noticeably. And by then they were hooked. By contrast almost every insured Ameerican is a potential loser under Obamacare. And some of those considered to be winners—i.e., the currently non-insured—will feel like losers if they are forced to insure and then remain inconveniently healthy.

So, for all sorts of reasons, opponents of this bill should not feel deterred from hope of repeal by the British experience. At the very least they have a window of opportunity to reverse the legislation of about eight to ten years. It's doable if you think it's doable—not if not.

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Background

Postings from Brisbane, Australia by John Ray (M.A.; Ph.D.) -- former member of the Australia-Soviet Friendship Society, former anarcho-capitalist and former member of the British Conservative party.

This blog gives a lot of attention to events in Australia and Britain -- places where there already exist systems similar to the one most likely to befall the USA if the Democrats get their way -- "Free" medical care supposedly available to all through government hospitals but with a competing private sector as well. The Canadian system is considered too Soviet to provide a likely model for the USA

TERMINOLOGY: Many of my posts concern the very instructive state of socialized medicine in Australia. Like the USA, Germany and India, Australia has a system of State governments which have substantial independence from the central (Federal) government and it is they who are mainly responsible for "free" health services. It may therefore be useful to some for me to note the standard abbreviations for the States concerned: QLD (Queensland), NSW (New South Wales), WA (Western Australia), VIC (Victoria), TAS (Tasmania), SA (South Australia).

For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

Conservatives do NOT object to helping the poor. Government welfare legislation in aid of the poor was in fact first introduced by conservatives -- Bismarck and Disraeli in the 19th century. What conservatives want is for the help to be delivered in a sane manner. And anyone who thinks that government bureaucracies can run hospitals well is completely out of touch with reality.

One of the oldest "free" public hospital systems in the world is that in the Australian State where I live: Queensland. It dates from 1944 (Britain's NHS began in 1948). So its advanced state of decay reveals well where the slow cancer of bureaucracy ends up. It now has three "administrative" employees for every medical employee. All those clerks are really good at curing people, I guess! Frequent bulletins on the flailing but ineffectual attempts to "fix" the system will appear here -- as well as bulletins on the dreadful things it does to patients and the long waits they endure.

On all my blogs, I express my view of what is important primarily by the readings that I select for posting. I do however on occasions add personal comments in italicized form at the beginning of an article.

I am rather pleased to report that I am a lifelong conservative. Out of intellectual curiosity, I did in my youth join organizations from right across the political spectrum so I am certainly not closed-minded and am very familiar with the full spectrum of political thinking. Nonetheless, I did not have to undergo the lurch from Left to Right that so many people undergo. At age 13 I used my pocket-money to subscribe to the "Reader's Digest" -- the main conservative organ available in small town Australia of the 1950s. I have learnt much since but am pleased and amused to note that history has since confirmed most of what I thought at that early age.

I imagine that the the RD is still sending mailouts to my 1950s address!

NOTE: The archives provided by blogspot below are rather inconvenient. They break each month up into small bits. If you want to scan whole months at a time, the backup archives will suit better. See here or here